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Labor Force Structure Experiencing ‘Silver Tsunami’

Idaho may not be home to hurricanes, but it has certainly experienced a “silver tsunami” – the rapid shift toward an older workforce.

While the state population grew 20 percent between the 2000 and 2010, employment levels for workers age 45 and older grew 34 percent.

Idaho’s labor force has experienced a significant structural change over an extended period – a demographic shift adding nearly 140,000 workers age 45 and older between 1991 and 2012. The population of workers age 25 to 44 increased by only 50,470.

Worker migration data is also uncovering the tsunami’s existence. Interstate unemployment claims in January 2013 revealed nearly 800 claims were made by workers age 65 and older – more claims than all other age groups combined. These interstate claims reflect the number of claims made by individuals who now reside in Idaho but are claiming unemployment benefits for jobs lost in other states.

Census data revealed Idaho’s younger workers are leaving the state.

According the 1991 U.S. Census Bureau’s Quarterly Workforce Indicators, 26 percent of Idaho’s workers were age 45 and older. That percentage has grown steadily to 40 percent by the third quarter of 2012.

Not every state participates in the Census Bureau detailed data collection effort, but national figures compiled by the Bureau of Labor Statistics show 29 percent of the workforce in 1991 was 45 and older with their share growing to 44 percent in 2012.

The same data show an opposite trend for workers under 45. In 1991 Idaho’s 25- to 44-year-old workforce made up 54 percent of all workers. By 2012 this group had fallen to 43 percent, mirroring the trend nationally.

The Census Bureau begins counting workers at age 14 while Bureau of Labor Statistics begins at age 16. The difference is probably not significant but would make exact comparisons difficult.

Observations do reveal a dwindling share of employed workers age 14 to 24. Younger workers were also hit harder by the recent recession. Before the recession, younger workers
comprised 20 percent or more of total employment. That share dropped to a low of 16 percent in 2010 and 2011 – by 2012 it increased to 17 percent. The recent turnaround for younger workers could be a positive indicator signaling employers are returning to pre-recession hiring patterns.

The eastern and southeastern regions of Idaho had a higher-than-average share of younger workers – reaching 24 percent in 2000. Since then the percentage has fallen for most years. This trend is likely triggered by labor markets signaling the need for postsecondary education that is delaying younger workers’ entrance into the workforce. Younger workers have also competed with more experienced older workers for the same entry level
positions.

As the baby boomer workforce reaches retirement age, the availability of younger workers to meet replacement needs has become a real concern in many industries. According to a recent study by the Idaho Leadership in Nuclear Energy Commission, nearly half of the Idaho National Laboratory’s 4,000 workers – about 1,900 – are older than 50.

Finding and training replacements for these and other high-skilled and high-paying jobs will become increasingly difficult over the next decade.

Beginning in 1991, Idaho workers ages 25 to 44 outnumbered those 45 and older workers by two-to-one. At the same time the national ratio was close but slightly lower. After 21 years the ratio has consistently decreased in Idaho and the nation. By 2012 the replacements reached a one-to-one ratio for most regions of Idaho and fell below one in the north central region.

This becomes a distressing problem for many state and federal government transfer payment programs like Social Security that depend on taxes from those who are currently employed to pay for entitlements of those who are no longer working. A replacement ratio greater than one is necessary to account for those leaving the labor force on a voluntary or involuntary basis through retirement, disability or death.

There are implications from the dramatically declining worker replacement rates and the structural labor force demographic changes. Certainly job availability should improve for those currently in 25 to 44 age range. But as the 45 and older population begins retiring and dying off, a slow return to a more sustainable worker replacement rate is expected.

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